Information provision and behaviour-based price discrimination

This article examines a model wherein firms first advertise their existence to consumers and, in the two following periods, compete with uniform pricing and then with behaviour-based price discrimination. I show that allowing firms to price discriminate can restore symmetry in equilibrium advertising decisions. I also establish that price discrimination increases (resp. decreases) profits and total welfare but hurts (resp, benefits) consumers when the advertising cost is high (resp. low). (C) 2013 Elsevier B.V. All rights reserved.